With the recent rally in the dollar index, we have been on a quest to find the floor in the metals and crude oil.
Here are some levels to consider from a basic technical level.

In gold, we will start with the Feb contract. Only 13 trading days ago we were sitting at all time highs, looking at the 10250 level… How quickly we have dropped to our present levels, basically around the 1075 level with today’s 2 month low at 1075.20… On the charts, we have come back and tested what had been the upper RESISTANCE in October… So now we have the old resistance looking like our new support. Just for arguments sake, if we have further to go on the downside, you’d have to consider support at the 1035 area, and then of course the 1000 level. If gold drops to the 1000 level, can you imagine the headlines?

And we could very easily see that, especially with so many analysts getting bullish on gold currently. Just food for thought if you are trying to find a good dip to buy. We’ve already melted over 150 bucks in 2 weeks. You may be trying to catch a falling knife at this point. I would suggest being patient and being careful getting truly bullish until perhaps the 1000 level has a test.

By the same token, I’d be careful getting short at these levels. We could snap back at any time and have a nice short covering rally. Basically right now on the charts, we are in no man’s land. Trade accordingly.

In March Silver, 13 days ago we were at 19.50. Today’s low at 16.78 was quite a haircut for anyone who bought new highs looking for continuation. Looking at the daily charts, there isn’t more support until 16.20, and then back to the October levels, around 15.85. Again, I’d be careful trying to catch this falling knife as well..

Crude oil technically also has some interesting points. Feb Crude had its recent highs back around Halloween at—- 83 bucks a barrel…. At the start of December, we were still trading at 80 bucks…Only six trading days ago, we fell below 71 bucks.. Can you say volatility?

As the dollar index rallied, crude was the best fade out there to take advantage of that move. Technically there’s good resistance at the 78-80 levels, and good major support down at 67 dollars.

I hope these levels give you some idea of where and how you want to proceed if you are looking at trading gold, silver or crude oil to try to take advantage of the moves resulting from the rising dollar.

Good Trading

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